T he September BLS Employment Situation Release was welcomed with relief for its marked improvement over the weak August report. Posting 248,000 new jobs, the September results helped drive the unemployment rate to 5.9%, the first time that measure has been less than 6% since July 2008.

Contingent Bill Rates are Steady Despite Record Temp Employment

Unemployment drops below 6%

The pronounced upward revision of new job estimates for July and August by 31,000 and 39,000, respectively was also encouraging.

However, the news wasn’t all good. The percentage of the US working age population participating in the workforce fell to 62.7%, a low level not seen since 1977. The unemployment rate fell both because net new jobs were created, but also because the number of people dropping out of the workforce continues to grow.

The average work week was up 0.1 hours to 34.6 hours, while private sector average wages dropped a penny to $24.53.

New Jobs Created in Diverse Industry Segments

Employment grew across many different industries, led by Professional & Business Services (which includes Temp Services). The return to school can be seen in the Education & Health growth. The Hospitality and Health segments remained strong, while Manufacturing was notably subdued. The public sector contributed 12,000 net new jobs, continuing a late recovery in the public sector.


Temporary Agency Employment – Yet Another Record Month


US employers continue to expand their reliance on contingent labor. September’s numbers delivered the 16th new record high in temp labor jobs. As hiring resumed after the recession, the pronounced reliance on contingent labor could be attributed to employer caution. But now, years into the job recovery, temp labor continues to expand its importance as a component of the workforce. In September, the number of temp jobs reached 2.1% of total nonfarm employment, a record high. How companies meet their labor needs continues to evolve, and increasing reliance on flexible contingent labor is clear feature of the post-recession economy.

Temp Labor – Upward Revisions


In recent months, the BLS has made consistent upward revisions to its estimates of temp labor employment. The change for August was particularly noteworthy, representing fully half of the total upward revision for all nonfarm job creation. This is encouraging for the months ahead.

Where is the Rate Pressure?

Job creation in 2014 has been strong, particularly for temp jobs. Curiously, this has not translated into abruptly higher wages for direct hire employees or higher bill rates for temp agency labor. In the past year, private sector wages have increased 2% and wages for those working in temporary help services are up by 3%. The Producer Price Index (PPI) for the Temp Help Services (through August, 2014) splits the difference at 2.5%. The Master IQNdex, reflecting bill rates paid by Global 2000 companies with advanced management programs, has risen less than 0.1% over the same period.

By any of these measures, the job market recovery has not yet translated to higher prices to consumers of that labor.


The September report showed new job creation levels above 200,000 per month. The unemployment rate fell below 6%, partly due to further decline in workforce participation. The larger trend toward reliance on contingent labor was evident, both through record employment and share of the labor market. Despite employment increases, wages and bill rate increases remain subdued and there continues to be a substantial reserve of potential workers outside the workforce whose reentry can dilute the expected tightening of supply.

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